Real Estate

CFPB walks back on appraisal flexibilities


But Fannie Mae and Freddie Mac continue to extend options to avoid in-person appraisals.

The Consumer Financial Protection Bureau rescinded a series of flexible COVID-19 policies Wednesday, including its support of alternative appraisal options. 

Last year the Office of the Comptroller of the Currency, the Federal Reserve, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the CFPB, in consultation with the state financial regulators, issued an interagency statement to address challenges relating to appraisals and evaluations for real estate-related financial transactions affected by COVID-19. The statement allowed for more flexibility when it came to physical property inspections, meaning many appraisers were not required to physically enter a property.

But when the CFPB rescinded its series of policy statements “to ensure [the] industry complies with consumer protection laws,” it also removed itself as a signatory to the appraiser flexibility statement. 

Even as the CFPB walks back its flexibilities for the housing industry, Fannie Mae and Freddie Mac continue to extend their flexible requirements.  

“To help ease appraisers’ concerns regarding restricted access to a homeowner’s property and the need for reduced interactions with homeowners, Fannie Mae has provided temporary flexible appraisal requirements,” Fannie Mae said in its most recent lender letter, updated in March. “We accept alternatives to traditional appraisals, such as virtual inspections.”

“We will accept an alternative to the traditional appraisal required under Selling Guide Chapter B4-1, Appraisal Requirements, when an interior inspection is not feasible because of COVID-19 concerns,” it states. “We will allow either a desktop appraisal or an exterior-only inspection appraisal in lieu of the interior and exterior inspection appraisal (i.e., traditional appraisal).”

Currently, Fannie Mae and Freddie Mac have extended their flexible policies on appraisal requirements to Apr. 30, 2021. 

“Working with the Federal Housing Finance Agency, Freddie Mac announced that it has taken action to make it easier for the mortgage industry to buy or sell a home,” Freddie Mac said when the flexibilities were announced last year. “Specifically, in order for homes to be bought, sold and refinanced, Freddie Mac will provide flexibility in employment verification requirements and leverage appraisal alternatives for eligible mortgages to address challenges lenders and borrowers are facing due to COVID-19.”

But the CFPB’s new acting director said providing companies with flexibilities should not come at the expense of consumers. 

“We are now over a year into the disruptive and deadly COVID-19 crisis,” CFPB Acting Director Dave Uejio said. “The virus has affected industry as well as consumers, but individuals and families have been hardest-hit by the pandemic’s health and economic impacts. Providing regulatory flexibility to companies should not come at the expense of consumers. Because many financial institutions have developed more robust remote capabilities and demonstrated improved operations, it is no longer prudent to maintain these flexibilities. The CFPB’s first priority, today and always, is protecting consumers from harm.”

The CFPB rescinded a total of seven policy statements, including the temporary hold on requirements for data reporting under the Home Mortgage Disclosure Act.




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